Israel and Jordan working towards closer relations

Benjamin Netanyahu and King Abdullah Photo: GPO

A senior Israeli delegation has met with Jordanian Prime Minister Hani Al-Muki to discuss energy, water and employment projects.

22 years after the signing of the Israel-Jordan peace agreement, the Middle Eastern neighbors are eager to strengthen their relationship through a range of joint infrastructure ventures. Earlier this month a senior Israeli delegation led by Deputy Minister of Regional Cooperation Ayoob Kara met with Jordanian Prime Minister Dr. Hani Al-Muki and discussed closer cooperation on water, electricity, and natural gas.

Jordanian sources attending the meeting spoke of a desperate need for basic infrastructures, especially water, in a country that has taken in several million refugees (estimates vary between 1.3 million and 2.4 million) from Syria and Iraq. Those sources said that Jordan's King Abdullah is committed to joint projects with Israel even though a large part of the Jordanian public opposes such a policy.

The largest planned joint project is a 200 kilometer underground pipeline between the Red Sea and the Dead Sea, which will provide 65-85 million cubic meters of water annually through a desalination plant. The project is designed to replenish the Dead Sea, which is drying up, and also includes a Hydro Electric Power plant producing 10 Mw.

The tender for implementing and operating the project was published last December and sources inform "Globes" that 17 consortia have bid for it including five Israeli companies, among them Shari Arison's Shikun u'Binui Holdings Ltd. (TASE: SKBN), Kardan NV (TASE: KRNV;AEX:KARD) unit Tahal Group International BV, Israel Chemicals Ltd. (TASE: ICL) and Yitzhak Tshuva's IDE, and Azrieli Group Ltd. (TASE: AZRG) unit GES. The value of the work is estimated at $800 million.

The Jordanians expect the project to begin in 2018 although the question of financing remains open. The US has reportedly offered to contribute $100 million and it is unclear if other countries will also contribute. Estimates are that Israel and Jordan will each have to allocate $150 million to the project. The aim is to complete the first pipeline and if it is deemed successful build another five or six. Under the terms of the agreement for the first pipeline, Israel is also committed to providing the Palestinians with 20-30 million cubic meters of water per year.

Huge natural gas contract

Also on the agenda in the cooperation talks between the Israeli and the Jordanians was natural gas. In the very near future, Israel and Jordan are expected to sign a huge natural gas deal. The plan is for the Leviathan partners to sign the deal to supply the Jordanian National Electric Power Company (NEPCO) with 45 billion cubic meters of natural gas over 15 years. A Memorandum of Understanding for the $15 billion deal was signed in September 2014 but talks on a final deal were frozen after Israel spent for 18 months on a gas outline agreement between the government and the Leviathan partners.

Jordan has no energy resources of its own and must import oil and LNG from Qatar and international companies like Shell. Energy demand grows by 7% per year in Jordan and refugees are increasing that demand. The Jordanian government is promoting renewable energy and is set to open a Russian-built nuclear fueled power station by 2022.

An Israel-Jordan gas deal depends on three factors: the price of the gas, the infrastructure arrangements, and Israel's long-term commitment to the deal. A recent report by the German Marshall Fund concluded that a gas deal is economically worthwhile for both Israel and Jordan.

Joint industrial zone

Another project that has been revived is the "Shaar Hayarden" joint industrial zone. The zone, first proposed in 1994, would be located south of Beit Shean with factories on the Jordanian side and logistics warehouses in Israel. Goods could be exported to the US tariff free.

There is also a plan to open a fourth border crossing between Israel and Jordan near Moshav Neot Hakikar at the southern end of the Dead Sea. There are currently border crossings at Eilat, Bet Shean and the Allenby Bridge. The fourth border crossing would facilitate the ability of more Jordanians to work in Israel and provide a shorter route for Israelis wanting to visit Petra.

Kara said, "Bringing in more Jordanian workers to Israel strengthens peace between the countries. Israel has a clear interest in strengthening the Jordanian economy so that it can combat extreme elements such as ISIS."

Kara sees 4,000 Jordanian workers passing through the new border crossing on a daily basis.

Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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Benjamin Netanyahu and King Abdullah Photo: GPO
Benjamin Netanyahu and King Abdullah Photo: GPO
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